By Daniel Libit
How much should you spend on a gift for a retiring college athletic director?
For the University of New Mexico Lobo Club, the answer to that question, as it came to pass last August, was $412.
According to a copy of the organization’s expense records, that is the amount the Lobo Club paid to buy former UNM AD Paul Krebs a handcrafted, solid maple ass-pedestal from Standard Chair of Gardner. The purchase was designated, “Miscellaneous”.
Now, mind you, there were some extenuating circumstances surrounding Krebs’s departure.
He was not so much retiring, in the affirmative sense, as he was resigning under intensifying pressure over a 2015 Scottish golf trip he had arranged for himself and some Lobo boosters, which had fallen under the scrutiny of the Offices of the New Mexico State Auditor and Attorney General. That burgeoning scandal — and a contemporaneous one involving the discovery of nearly a half-million dollars of unpaid luxury suite revenue for UNM men’s basketball games — had now fully breached the levees of the Lobo Club.
In due course, the controversies would put an embattled Lobo athletic director and UNM’s bedraggled sports booster group at a tense, face-saving impasse.
Little known to anyone outside the Lobo Club’s Executive Committee is that Krebs had already been spearheading an effort, months in the making, to officially do away with the organization.
At points last summer, before all hell broke loose, this looked to be the direction things were headed: the Lobo Club was going to be officially swallowed up by the UNM Foundation.
But alas, before you can get rid of the Lobo Club, you first have to understand what the Lobo Club is.
To fully discern this, I have found, is to encounter Neo’s lesson from that spoon-bending child mentalist in “The Matrix”: Do not try and bend the spoon. That’s impossible. Instead, only try to realize the truth…There is no spoon.
Evidently, the authorities are trying to discern this, as well. In response to an inquiry, the State Auditor’s office told NMFishbowl.com that it is currently in the process of evaluating whether the Lobo Club should be regulated as a public entity.
“We are looking into their structure to better understand how they were formed and are governed and make a determination whether or not they are a state agency under the Audit Act,” OSA spokesman Enrique Knell said in a statement. Knell added that OSA was moved to do this by New Mexico state Judge Nancy Franchini’s May ruling in favor my Inspection of Public Records Act lawsuit against the UNM Foundation.
Founded in 1932, the Lobo Club has historically been a sleepy little social organization that conducted golf outings and charity dinners, and once a year wrote a single, fat check to support Lobo athletic scholarships. It was a past-its-prime civic group where provincial power-brokers gathered to dote on the hometown team; picture the Kiwanis or Rotarians without the tasselled fezzes or tiny tricycles.
Today, for all intents and purposes, the Lobo Club is an organization in name only: it doesn’t have its own offices (UNM provides them), its own W-2 employees (they come from UNM and the UNM Foundation), or any year-end net assets to speak of. According to the Office of the State Auditor, the Lobo Club’s bylaws don’t even require it to have a treasurer. For all these reasons and others, the Lobo Club should be rather easy to do away with.
As a shell operation, however, it has certain intangible benefits: among them, it allows people in the UNM athletic department to spend money in ways they might not otherwise be able. And, because the Lobo Club asserts itself as a separate non-profit organization, outside the authority of state disclosure laws, these transactions most often occur without the public discovering them.
Ultimately, the intangibles would prove too irresistible to abolish — especially as the athletic department’s other secret stash house, the UNM Foundation, was being doubly threatened by IPRA litigation and a state criminal investigation. So, over the span of two quick months last year, the fate of the Lobo Club took a dramatic reversal: Not only was its death sentence commuted, but it would soon be advanced as the vehicle to reorganize the entire UNM athletic department around.
All this came at the same time the chronically understaffed operation was at its most short-handed. Yet, the chain reactions from the Scotland scandal fallout would force the Lobo Club’s paltry accounting department — if it could even be called that — to take on greater bookkeeping and processing responsibilities than ever before.
Last September, according to university and Lobo Club records, hundreds of thousands of dollars of funds earmarked for Lobo athletics were diverted from the UNM Foundation into the Lobo Club’s bank account, waiting for dispersal.
Ostensibly, this rerouting maneuver was in response to a State Auditor special investigation into UNM athletics, which raised concerns about the co-mingling of private and public funds and potential violations of the state’s anti-donation statutes. But by going about it this way, UNM was effectively dumping its athletic department’s financial mayhem onto an even less capable and dependable disbursement agency, as evidenced by everything that had occurred up to that point. If that didn’t make sense in theory, it would look even less elegant in practice.
Moreover, what were supposed to be temporary stopgap measures have now dragged on for over a year, as strategic initiatives have stalled and proposed deadlines have come and gone, several times over.
Presently, the latest scheme — being championed by current UNM Athletic Director Eddie Nuñez — looks to absorb the Lobo Club and its staff into the university by early next year, while maintaining the flimsiest window dressing necessary to maintain the organization’s 501(c)(3) status.
“Separate 501(c)(3)3 organizations are not unusual in college athletics,” Nuñez told NMFishbowl.com. “They are actually quite common. These organizations allow for receipt of funds with taxable benefits to those donating… no different than foundations and a myriad of other examples in higher education, service organizations, etc.”
Whereas Krebs once tried to simply discard the Lobo Club carcass, Nuñez is instead trying to cannibalize it.
In response to a series of questions about the Lobo Club and its future, interim Executive Director Jalen Dominguez and Board President Bart Kinney provided the following statement to NMFishbowl.com:
“The Lobo Club recently received a proposal for a restructure from Athletic Director Eddie Nuñez and President Garnett Stokes. The Lobo Club Executive Committee is currently in the process of reviewing the proposal. We are excited about the collaboration displayed between the University, the UNM Foundation and Lobo Club leadership in working together to find the most efficient and effective way possible for the Lobo Club to continue its mission and provide support to our Student-Athletes at a high level. We are very proud of what we have been able to accomplish as an organization and excited for the future.”
Essentially, the new plan appears to be a hybrid of the two previous failed iterations of the Lobo Club, with some new smoke and mirrors and the imprimatur of a $53,000 consultant UNM hired over the summer. At the end of the day, the objective seems to be vesting Nuñez with near-total discretion over the Lobo Club’s money, without necessarily subjecting it or him to increased accountability.
Indeed, the only thing that could impede upon Nuñez’s authority, is the Lobo Club Board of Directors, which is increasingly set to yield its power under the proposed arrangements. While the Board hasn’t proven to be the most hyper-vigilant overseer of late, it has occasionally shown the gumption to ask tough questions.
Is the takeaway from the last two checkered years in Lobo athletics that the UNM athletic director needs even more unchecked power? Apparently so. And thus, one boondoggle begets another.
What seems most curious—or maybe it isn’t—is that this latest organizational sleight-of-hand flies directly in the face of the public proclamations about the lessons learned from the recent financial fiascos of Lobo athletics. Stokes, who became UNM’s new president in March, and Nuñez have both independently pledged that whatever happens going forward with Lobo sports financing, it will transpire in a completely transparent fashion. Or maybe it won’t.
“Our transparency will be consistent with the requirements for UNM and/or for foundations,” Nunez said (emphasis added).
In the meantime, the Lobo Club has found itself mired in an organizational no-man’s land: Its executive director position has been handled on an interim basis since last December; other important staff positions have gone unfilled following departures; and changes to the Lobo Club’s bylaws have gone unimplemented, months after being passed out of committees. Last September, interim UNM President Chaouki Abdallah reported to the university’s accrediting agency that the Lobo Club was well underway with revising its Memorandum of Agreement with the school. However, almost 14 months later, those revisions are still pending.
The narrative of the Lobo Club’s latest (and, perhaps, greatest) identity crisis emerges from the pages of minutes and financial records maintained by its Executive and Finance Committees. Some of these documents were retrieved through a series of mirroring public records requests, made to both UNM and the Lobo Club, and ultimately discharged with the threat of litigation.
This process, tortoise-like and capricious, tells a story unto itself, revealing the desperation by certain concerned parties to maintain the Lobo Club’s inscrutability, even as the school tries to project a renewed commitment to openness. While gradually turning over some of the requested materials, UNM and the Lobo Club refused a number of other records requests. In these instances, they argued that the Lobo Club is a private, non-profit organization, not subject to state disclosure laws. Most curiously, the Lobo Club refused to furnish financial records attached to its Finance Committee minute packets, some of which the university agreed to provide. The university, for its part, turned over some documents in September, which it had categorically denied this past spring.
Kinney and Nunez declined to respond to questions about how the Lobo Club handled my records requests. But on Oct. 16, Kinney sent a letter to his Board of Directors, informing them about records requests “from various media outlets” and explaining that the Executive Committee had authorized a limited release of meeting minutes, “with donor names redacted.”
“As a non profit 501(c)3, we believe that such information is private between you and the UNM Lobo Club,” Kinney wrote. “The Lobo Club staff and the board works very hard to support our student-athletes at a high level and with great integrity. We take this responsibility very seriously and believe that is displayed both by the success of our fundraising efforts and the clean results of several consecutive audits.” (Emphasis added to note the low bar.)
However, donor privacy wouldn’t begin to explain why the Lobo Club denied multiple requests seeking documentation showing how it spends money — pointedly, how it reimburses certain university functionaries for their personal expenses. While much remains sealed away, NMFishbowl.com was, in certain instances, able to find alternate paths to some of this closely guarded information, which may hint at other motivations, salient ones, for this cult of secrecy.
In May, the university retained the “consulting services” of Mike Alden, the former Missouri Athletic Director, to help UNM comprehensively address its turmoiled athletic department. There would be an array of problems to tackle, including a forthcoming report that Lobo athletics was out of Title IX compliance, and leadership’s unpopular decision to cut several Olympic sports.
But beyond these pressing concerns, Alden was asked to help Nuñez implement his vision to reorganize his department, with a target date of spring 2019. For reasons that increasingly seemed attritional, the Lobo Club was to become the centerpiece of this restructuring.
In a special investigation report released in November, the State Auditor had criticized UNM for the “tangled web” of its athletic department revenue streams and, while it wasn’t explicitly mandated, the university took this as a prompt to centralize the cash flow.
Alden, a one-time Lobo associate athletic director, was also a former colleague of Stokes’s at Missouri. If you need a credentialed outsider to rubber-stamp your scheme for athletic overhaul, and you’ve got $53,000 to spend, why not slip it to a pal who will likely give you the answer you already know you want?
For years, the Lobos’ fundraising roles had been divided between the Lobo Club, which was supposed to handle small-dollar contributions, and the UNM Foundation, which processed bigger hauls like those tied to multi-million dollar naming rights agreements. Over the last decade, these parallel lanes had been paved without an overarching plan. In fact, several of the key roles the Lobo Club had come to inhabit, like the stewardship of The Pit luxury suite proceeds, were purely patchwork.
The public repositioning of a higher-powered UNM Foundation in 2008 actually sent the Lobo Club into near-total eclipse. The foundation’s prominent new face was abetted by the booster club’s financial foul-ups that were revealed in annual independent audits from 2009 to 2011. And whenever the chummy little club was given something new to do—like supervision of suite revenues—it seemed to screw it up.
Given that the foundation already had a robust infrastructure in place — with all the necessary accounting, legal, and processing support — the logical consolidation of the Lobo Club’s responsibilities would have been there. As it were, most of the Lobo Club’s current staffers were actually employed by the UNM Foundation. Also, the foundation had its own 501(c)(3) designation, and it could continue to operate in secret — at least while it appealed my public records lawsuit.
But the UNM Foundation’s appetite to take on more athletic-related duties had diminished: over the last two years, it had repeatedly been burned by these entanglements (i.e., the controversial WisePies naming-rights deal; the Scotland trip; moi) and it was fatiguing of the high-scrutiny game that now comes with the handling of Lobo dinero.
Nuñez, for his part, seemed equivalently eager to consolidate athletics fundraising into one, discrete booster organization that answered directly to him. He would advertise this concept as consistent with the budding national model; it harkened to what Nuñez had worked with in his previous post at LSU, albeit with far fewer cooks in the kitchen. (The Tiger Foundation has 39 employees and an almost equally large Board of Directors.)
In recent years, the Lobo Club’s board had swollen to almost 40 members, thanks to Krebs’s idea of adding a clique of “corporate” directors to its mix. But Krebs had come to see his influence over the Lobo Club wane during his time, especially since the two most recent executive directors were hired as UNM Foundation employees. Nuñez looked to grab the ball at a time when others were beginning to take their eye off of it.
Since the release of the State Auditor’s investigative report in November, UNM was responsible to report on its ongoing efforts to enact various corrective measures. That process was beginning to wind down by mid-summer.
On July 3, Victor Griego, a senior staffer at UNM’s Internal Audit Department, emailed Deputy State Auditor Jack Emmons, inquiring as to whether he wanted to meet with Nuñez as part of OSA’s assessment. Emmons responded that he didn’t think it was necessary.
In a subsequent email exchange, Emmons gave a status report of what OSA recommendations were still in the offing, including those that dealt with cash advances, a department procedures manual, and a process for the athletic department to review the Lobo Club’s contact log.
“No need for us to review,” Emmons wrote. “UNM appears to be on the right road to correcting deficiencies.”
It’s worth noting that, since its special investigation report was released last year, a new regime from a new political party has taken charge of OSA. Democrat Tim Keller, the former state auditor, was elected Albuquerque’s mayor and Gov. Susana Martinez had appointed Republican Wayne Johnson to replace him. Whether it was a matter of political discretion or simple resource allocation, the follow-up was far less robust than the state’s initial probe.
Enrique Knell said OSA has, in recent weeks met on several occasions with the “finance team” from UNM athletics.
“We have reviewed the improvements made to their accounting system and continue to monitor their efforts to get UNM Athletics spending under control,” Knell said.
In mid-July, Garnett Stokes tasked a small working group to look into ways of recasting an ill-fated fundraising organization into the nerve center of the athletic department. Dorothy Anderson, UNM’s Vice President of Human Resources, was put in charge of the group, which included UNM Regent Marron Lee; UNM Foundation Vice President Larry Ryan and General Counsel Pat Allen; and literary studies professor Finnie Coleman, a member of the UNM Faculty Senate’s Athletic Council.
Eventually, Stokes would decide to add some Lobo Club Board members to the mix, as well.
Officially, the working group was supposed to consult with a wider array of voices, and then make key recommendations to Stokes by early August. However, emails obtained by NMFishbowl.com call into question exactly who was dictating to whom.
On August 30, Anderson sent Nuñez and Alden a draft of an email she planned to distribute to the working group, summarizing its key proposals up to that point. There was one crucial sticking point, she informed them, which needed sly remediation: how to make Nuñez, a university employee, in charge of a purportedly separate non-profit.
“Unfortunately, having the (Lobo Club’s Executive Director) report to the (Athletic Director) seems to be a real issue for the 501c3 [sic] status,” Anderson wrote. So, she proposed a kind of rhetorical roundabout to solve the problem:
“(Executive Director) will have a reporting relationship to the Lobo Club Board and, potentially the Athletics Director. This reporting relationship is required to avoid jeopardizing the 501(c)(3) status and maintain the separateness between UNM and the Lobo Club; however, we can endeavor to include language in the (Memorandum of Agreement) to ensure AD has ability to identify priorities and manage and contribute to the management of the ED.”
In response, Alden wanted to make perfectly certain how the chain of command was to operate, even if the proposed agreement language was fuzzy: “Hoping that the daily reporting lines of the Associate AD for Annual Giving/Lobo Club will be to the Deputy AD for External Operations and then to Eddie [Nuñez]. Understand the need for their to be relational reporting to Lobo Club Board reconstituted and smaller.” (Emphasis added.)
Asked about the exchange, Anderson told NMFishbowl.com: “The quotation clearly states the ED will report to the Lobo Club Board and that the 501(c)(3) status of the Lobo Club will not be jeopardized. The intent of the working group was to effect a more efficient and streamlined Lobo Club structure.”
Long before the working group was ever assembled, Nuñez was trying to figure out how to get the Lobo Club to pay for his stuff.
At an Executive Committee meeting on Jan. 9, Nuñez explained to the members why he wanted the Lobo Club to comp a trip he had taken the previous month to New York, where he attended former UNM football player Brian Urlacher’s induction into the College Football Hall of Fame.
The Lobo Club had purchased a table for this event, a rare glimmer of positive attention for UNM sports during an otherwise painful stretch. While there is nothing unusual about a college athletic director traveling across the country to blandish a star alumnus, there would be something unusual in how Nuñez tried to cover these travel costs: he wanted the Lobo Club to reimburse him.
According to the meeting’s minutes, “Mr. Nuñez explained that he wanted to keep the NYC function separate from his regular travel expenses as they were for a donor event.” The implication was that such a request was being made out of an abundance of caution, in lieu of the special audit. Still, it was an unusual ask — the Lobo Club did not typically reimburse the travel of the athletic director. In fact, when asked at the committee meeting, Lobo Club Financial Coordinator Valerie Arbogast, its longest-tenured staffer, couldn’t recall that ever having been done.
“At times, a portion of certain trips are considered donor cultivation,” Nunez told NMFishbowl.com. “I wanted to make sure any expenses associated with donor cultivation are paid accordingly through the correct procedures.”
But that wasn’t all Nuñez wanted. He informed the group of another “predicament” he faced in trying to get the university to cover his vehicle insurance and gasoline bills for his UNM courtesy car. Nuñez said the university was now being resistant, and he wanted to know whether the Lobo Club could pick up these tabs, too.
“I was originally told that this was to be paid out of the Lobo Club, so I asked if this was previous practice which was not,” Nuñez said. “During that process it was determined that it was the responsibility of the University and reimbursement was made by the University as per the [employment] agreement.”
Two months later, on March 16, Nuñez was reimbursed $721.25 by the Lobo Club for what was described as a “donor dinner” in Las Vegas, which took place during the Mountain West Conference basketball tournament. However, the memo line of the Lobo Club’s financial details, obtained by NMFishbowl.com, failed to identify any donor in attendance. Rather, the guests included Stokes, UNM Regent President Rob Doughty and his wife, and UNM Regent Marron Lee and her husband.
“Unfortunately due to travel complications the donors did not make the dinner prior to the basketball game,” Nunez said. “The use of these funds were approved by our Lobo Club Finance Committee.”
UNM and the Lobo Club both rejected IPRA requests seeking the receipts and back-up documentation for reimbursements paid by the Lobo Club to Nuñez; no explanation was provided for why these materials should not be disclosed.
But this is not the only time in recent history that the Lobo Club has bought UNM officials a pricey Las Vegas dinner under the pretense of donor cultivation.
Records show that the previous March, The Lobo Club picked up the tab for a $1,138 dinner in Las Vegas hosted by McKamey, and attended by UNM Executive Vice President David Harris, Doughty, and their two wives. The reimbursement to McKamey was marked as a “Cultivation & Stewardship” expense even though, once again, no donor was listed in corresponding financial records obtained by NMFishbowl.com. The Lobo Club denied requests seeking the receipts and back-up documentation for this dinner, as well. McKamey declined to respond to a request for comment.
While there’s no indication that any public dollars were spent on these soirees, they occurred at a time when the university was under intense media scrutiny over how school officials indulged themselves on somebody else’s dime. Just three months before, Harris had stormed out of an on-air interview with KOB 4, after being questioned about attending — and signing off on — a $1,330 dinner that Krebs hosted in Las Vegas the previous March. For that occasion, public money was used.
The ebbs and flows of the Lobos’ fundraising organizations have fluctuated repeatedly in recent years. However interconnected their destinies are, the relationship resembles a three-dimensional game of Chutes and Ladders. As the UNM Foundation has taken slings and arrows over the last year, the Lobo Club gained new life. But just a year earlier, the Foundation was standing tall, and it looked like the Lobo Club was on its last legs.
At a February 2017 meeting of the Lobo Club’s Executive Committee, Krebs and UNM Foundation Vice President Larry Ryan pitched the idea of getting rid of the Lobo Club. In fact, Krebs said that UNM’s legal counsel was already looking into the feasibility of dissolving the Lobo Club’s 501(c)(3) status and having the UNM Foundation take over its development duties.
“Perhaps there is a duplication of efforts that could be eliminated,” Ryan explained, according to meeting minutes.
Of the seven full-time Lobo Club staffers working at that time, five were employees of the UNM Foundation, and the other two were employees of the university. The Lobo Club’s administrative assistant position had, for the previous two years, been staffed by a part-time UNM student. And all the aforementioned individuals worked out of the UNM athletic department offices.
Lobo Club Board President Chris Cates spoke supportively of the idea, as did McKamey. One board member, Dee Dennis, wondered aloud whether this move would cause a “perception problem in the community,” but Cates said donors “wouldn’t know the difference in how the back office is working.” The significant change would be to the Lobo Club Board itself. McKamey noted that there would be no fiscal responsibility for the Lobo Club, and therefore no need for a governing board; it would effectively be turned into a “volunteer fundraising committee.”
But at the next Executive Committee meeting, it was announced that the plan to off the Lobo Club had been tabled. A week later, as NMFishbowl.com reported, Krebs sent a desperate-sounding email to McKamey, Dominguez and Sean Ferrera, another UNM Foundation employee, demanding that a “concerted effort” be undertaken to collect past-due money from club seat and luxury suite-holders.
Three weeks after that, on April 28, 2017, Krebs and McKamey sent a joint email letter to the Lobo Club’s Board of Directors, alerting them that unfavorable news would soon be breaking in the press about the 2015 Scotland trip.
“We feel the media story may focus on some specific details about the trip including the role each of us had on the trip which is explained above,” McKamey and Krebs wrote. “Paul’s trip expense was covered by the athletics department and Kole’s trip was covered by multiple sources including the Lobo Club, UNM Foundation and UNM Athletics.”
“We feel this trip was a good investment of time and resources to help further the mission of the athletics department. We take being good stewards of the athletics department and Lobo Club funds very seriously.”
McKamey had also gone to Scotland, as had his father-in-law, Rocky Hughes, a UNM donor and member of the Lobo Club’s Finance Committee.
Within days, KRQE News 13 reported that the university had spent almost $40,000 to pay for Krebs, McKamey, former Lobo basketball coach Craig Neal, and three boosters to go to Scotland. Two months after that, KRQE followed up with a report that UNM had failed to collect $432,000 in fees from Lobo men’s basketball suites and club seats, dating back to 2010.
With Krebs having resigned the month before, Janice Ruggiero, UNM’s newly-installed interim Athletic Director, was tasked with issuing the mea culpas at a press conference.
“I believe anytime anybody is dealing with money we all need to be held accountable,” she said. “Athletics needs to be held accountable. The Lobo Club needs to be held accountable because it is public money.” As the Albuquerque Journal noted at the time, the press conference was held inside the Lobo Club Board Room at the athletic department’s administrative building, but nary a Lobo Club staffer was on hand to answer questions.
In 1993, the Lobo Club entered into a Memorandum of Agreement with the university, which was amended in 2003. That agreement stipulated that all Lobo Club staff members would be employees of UNM, and that the university would continue to pay for all necessary staffing going forward. Furthermore, the university agreed to provide free office and meeting space for the Lobo Club, and to cover all its utilities, property insurance and support services. UNM also agreed to provide other services to the Lobo Club, which included “business, financial, legal, public relations and consulting.”
In any meaningful way, then, the Lobo Club was part of the university, except for the fact that the agreement defined the two as distinct. The key language was contained in Paragraph 9.2:
“The Lobo Club and University agree that, at all times and for all purposes of this agreement, the Lobo Club as an entity, in the performance of this agreement and other activities to be undertaken by the Lobo Club, shall act as an independent separate legal capacity and not as an agent of the University.”
The Lobo Club was to maintain a separate bank account, from which it would transfer funds into UNM agency accounts — essentially, savings accounts that existed solely for these deposits. According to the MOA, the Lobo Club could not disburse funds, in the form of compensation or gratuity, to any individual in the athletic department, or to any specific Lobo team. Also, it required the Lobo Club to hire an independent accounting firm each year, which would conduct an annual audit of the organization.
At the start of the last decade, as the Lobo Club’s portfolio began to expand, those annual audits consistently raised alarms about its capacity to balance the books.
In the 2009 annual audit, Moss Adams, the Lobo Club’s independent accounting firm noted that the organization’s financial statements were not up to Generally Accepted Accounting Principles. In response, the Lobo Club blamed a recent vacancy in the financial coordinator position. It pledged, going forward, to not only fill that job, but to better define its responsibilities.
However, the following year, the audit was even more damning, producing nine separate findings that targeted: the cash recipient process; the lack of supporting documentation for reimbursements; and, once more, the failures of the financial statements and general ledger process. In addition, the audit specifically highlighted the Lobo Club’s lack of formal written policies or procedures to handle contributions related to The Pit’s $60 million renovation. The Lobo Club responded to the findings by saying it had only recently hired a financial coordinator and was in the process of reviewing its policies and procedures manual.
The next year, a new accounting firm, KPMG, took over the audit, but the report flagged familiar concerns. The Lobo Club’s financial statements were even further downgraded to a “material weakness”, after KPMG found account balance errors and learned that journal entries were not reviewed by anybody other than the preparer. This time, the accounting issues aroused local media attention. Paul Krebs and the Lobo Club’s newly-hired executive director, Lee De Leon, pledged to make swift improvements and Ava Lovell, the UNM Comptroller, publicly challenged the Lobo Club Board to “wake up” and address its staffing deficiencies.
But how was this the Board’s fault?
At UNM’s behest, the organizational lines between UNM fundraisers became more and more blurred as operational initiatives and executive employees shifted back and forth between the Lobo Club and the UNM Foundation. You couldn’t tell the players without a scorecard; it made accountability a particularly fickle proposition.
Consider the unusually charmed fate of Larry Ryan, who presided over the Lobo Club and all UNM athletics fundraising during this problematic period.
Ryan started with the Lobo Club in 2000, initially serving as its director of annual giving. After a three-year stint fundraising at the University of Evansville in Indiana, Ryan returned to UNM in 2005 and, from 2008 to 2011, held the title of Associate Athletics for Development. In this role, Ryan supervised the Lobo Club’s then-Executive Director, David Sabolcik; Ryan was also shifted over from being a UNM employee to a UNM Foundation employee, where his salary would precipitously increase.
In 2011, Ryan’s last year as Associate Athletic Director for Development, the UNM Foundation paid him almost $100,000 in salary and bonuses, according to its annual tax filings. By that point, four of the Lobo Club’s eight staffers were UNM Foundation employees.
In 2012, he took home $140,000 and by 2016, he was pocketing $243,190 — a staggering 140-percent pay increase over a four-year period. Ryan continued to serve as the direct supervisor of Sabolcik’s Lobo Club successors — De Leon, Stuart Starner and McKamey — who all were hired into the position as UNM Foundation employees. Ryan decline to respond to a request for comment. (*See correction at end of story.)
Finally, in 2015, the Lobo Club amended its Memorandum of Agreement with the university to include the UNM Foundation as a party. By that time, six of the 10 Lobo Club staffers were UNM Foundation employees.
Finally, in 2015, the Lobo Club amended its Memorandum of Agreement with the university to include the UNM Foundation as a party. By this time, six of the 10 Lobo Club staffers were UNM Foundation employees.
The new MOA ratified — long after the fact — that Lobo Club staff members could be employed by either the university or UNM Foundation. The Lobo Club’s executive director would now be mutually selected by the UNM athletic director and the UNM Foundation’s president, and the AD was to no longer be a voting member on the Lobo Club’s Board of Directors.
The agreement revisions attempted to explicate the tangled web of financial processes that wended between the university and its two 501(c)(3) nonprofit support organizations. In this newly formalized arrangement, the Lobo Club agreed to take a backseat to the UNM Foundation: “The Lobo Club further agrees that it will not consciously seek donations from potential donors whom the University has prioritized for other needs of the University, except with the approval of the Foundation President and Vice President of Athletics/Director of Athletics.”
Crucially, the MOA stipulated that, unlike certain donations made to the UNM Foundation, Lobo Club funds that were transferred to the University were henceforth public monies, and thus under the burden of relevant state laws and regulations.
Around this same time, the UNM Athletic Department released an earnest, five-year, 94-step strategic plan dubbed, “Making Lobos for Life.” Krebs had hired Collegiate Sports Associates, an Atlanta-based university hiring and consulting firm, to help UNM flesh out six main priority areas, which are almost self-parodying when read in retrospect. Choice example: “GOVERNANCE — Lobo Athletics is a source of pride for all of New Mexico because we compete successfully, operate with integrity and represent the entire state with dignity.”
As for the Lobo Club, the strategic plan called on it to increase membership to 5,500 and to boost the revenue from Lobo premium seating to “at least” $2.1 million. To reach these new bars, the plan allocated for an additional $8,000 for marketing, but no more staff. But the dawning era, with a Lobo men’s basketball program in decline, would make for slim pickings. While membership peaked to roughly 4,200 during the 2012-2013 season, it has since dropped to around 2,100.
Two years later, when Krebs presented his plan to terminate the Lobo Club, he cited the need to reduce overhead, even though the UNM Foundation was shouldering much of that burden. But once the Scotland story broke, Krebs needed cover and now he courted the booster group.
It was just one more example of how the Lobo Club came to represent The Matrix of UNM sports. People looked at it and saw what they wanted to see. Most observed an array of numbers that didn’t seem to add up. Eddie Nuñez saw a juicy steak. Until his final moments, Krebs perceived a dying vessel that ought to have its plug pulled. But now he needed an alibi and a character witness.
As the Albuquerque Journal retrospectively reported, Krebs sent an email to McKamey and Ryan on April 26, 2017, exhorting them to stand together in the face of forthcoming torment. Krebs reminded them, and not subtly, of his past acts of patronage to the Lobo Club.
“We have always acted as a team,” Krebs wrote. “As an example I took significant hits for a bad lobo club audit several years ago. I didn’t distance myself or seek to justify my role. I stood with the lobo club thru that time and we stood united together.”
Krebs concluded his message with a question he clearly hoped to be rhetorical: “Are we in this together or not?”
I think it’s fair to assume, dear reader, that you’re well aware of the clusterfuck that proceeded. If not, you can consult some useful chronicles here, here, and here.
On August 8, 2017, Lobo Club President Kyle Beasley reported to the Executive Committee that he and McKamey had met with Chaouki Abdallah about the possibility of the Lobo Club reimbursing the university for the Scotland trip expenses. But Beasley, according to meeting minutes, said that he had a lawyer review the organizational bylaws, and advised him that they prohibited the transfer, as it did not meet the Lobo Club’s mission. The committee agreed that such a move would create a bad perception among Lobo Club donors and, unless they were given an explicit written request from Abdallah, they would not cover the Scotland trip. That request evidently never came.
At the same meeting, Beasley told the attendees that he had reviewed a copy of the special audit report, which was due to be made public at month’s end. McKamey asked Beasley what it would mean for the report, if the Lobo Club didn’t reimburse the university for Scotland. “Beasley said the finding would remain with the University according to the auditors,” the minutes stated.
(Incidentally, it was noted, the state auditor had been planning to handle the Lobo Club’s annual review, but because of the special audit, it farmed it out to Moss Adams.)
The State Auditor’s special investigation report dropped last Nov. 10.
“(F)rom an internal controls perspective,” the report stated, “the [Scotland] trip may have been a more appropriate expenditure of the Lobo Club. Because UNM paid for the trip, likely issues regarding Anti-Donation Clause violations and the propriety of the expenditures arise.”
As it related to the failures in collecting Pit luxury suite and club seat revenue, the report primarily blamed “inadequate formal documentation” between UNM, the Lobo Club, and Lobo Sports Properties, the Learfield subsidiary that handled the school’s sports licensing agreements. (I filed a public records lawsuit against Lobo Sports Properties last year.)
The OSA report further suggested that the “structural overlap” between the university and its booster entities needed “to more clearly discharge UNM’s fiduciary duty.” It recommended that UNM’s Internal Audit Department take a greater role in overseeing the operations of its “related entities.” Finally, it determined that the process of transferring funds from the Lobo Club to the University “led to an appearance of impropriety at best, and violations of the Anti-Donation Clause of the New Mexico Constitution at worst.”
A month prior, state investigators sat down with Valerie Arbogast, the Lobo Club’s financial coordinator, in an effort to understand the confusing process in which money moves from UNM’s booster clubs into the university’s Banner system.
Arbogast was one of the few people who could even begin to explain how this byzantine system worked. “The only corroboration the OSA has is our walkthrough of these transactions on (Arbogast’s) computer,” OSA acknowledged in a corresponding memo obtained through an IPRA request.
Arbogast explained to investigators that there are a number of sport-specific booster clubs for UNM, which are tasked with raising additional monies for the programs they support. For example, the “6th Man Club” raises funds for men’s basketball; the “Black Diamond Club” for skiing; the “Dugout Club” for baseball; and so forth. Coaches are responsible for soliciting donations to their respective club, which the Lobo Club then processes and deposits into its general operating account with U.S. Bank. At the end of each month, Arbogast would then transfer all the funds into specific “Sports Enhancement Accounts” at the university, which coaches could then tap in order to cover expenses.
Five days after the audit report was released, on August 31, UNM announced the hiring of LSU Deputy Director of Athletics Eddie Nuñez to be Krebs’s successor.
At the September 12, 2017 Lobo Club Executive Committee meeting, Janice Ruggiero told the members that, in response to the audit report, there had been several meetings to discuss the future of the Sports Enhancement Funds. “The State Auditor wants these funds out of the accounting system,” she said, according to meeting minutes. The university had already agreed to transfer the enhancement account monies out of its agency accounts to either the Lobo Club or UNM Foundation.
But the UNM Foundation evidently had little interest in taking over additional financial responsibilities for an athletic department that had given it perpetual acid reflux over the previous four months. So, it was left to the hapless Lobo Club to fill the void.
Almost immediately, more than $300,000 of new Sports Enhancement Funds were moved into the Lobo Club’s bank account. No longer would these funds be transferred into the Banner system. Since that time, the Lobo Club staff has been responsible with directly disbursing monies and reimbursing coaches for team-related expenses.
McKamey told the Executive Committee that there would be additional staffing needs in order to handle the added responsibilities, and that its agreement with the university would need revision. Two days later, Abdallah sent a letter to the Higher Learning Commission, UNM’s regional accrediting agency, attempting to address its concerns over the State Auditor investigation. (NMFishbowl.com previously reported on the letter). Among other things, Abdallah explained that the Lobo Club was now in the process of taking over the enhancement accounts, and that the parties were already at work revising the MOA between the Lobo Club and the university.
Nuñez was introduced by Beasley to the entire Lobo Club Board of Directors at their October 2017 meeting. JoAnne Vigil Coppler, a committee member and current Santa Fe City Councilor, expressed hope that Nuñez would inject Lobo athletics with “new ideas.”
But in this meeting, new ideas quickly yielded to ongoing drama. In his opening remarks, Beasley informed the Board that, after their previous gathering, he had been “ambushed” in the parking lot by KRQE reporter Larry Barker, who wanted to ask on-camera questions about the Scotland trip. The rest of the meeting was dominated by talk of The Pit suite collection efforts, and the national attention over several UNM football players deciding to kneel during “The Star-Spangled Banner” at the homecoming football game against Air Force.
Not long after, McKamey, himself a former UNM footballer, announced his resignation. In a Nov. 8, 2017 letter to the Lobo Club Board of Directors, McKamey told them that, “with a heavy heart,” he had decided to transition back to the private sector. In a telephone interview at the time, McKamey insisted that his resignation was not coerced, and that he had even been offered alternate jobs to stay at the UNM Foundation.
Over the preceding months, the united front projected in that June joint email with Krebs showed signs of fraying. And while McKamey maintained his diplomacy throughout, he alluded at the time to a confidence that, when the full story was told, he wouldn’t be the villain.
“The best thing is that we look forward to the audit report and whatever comes out in that, people can decide for themselves,” McKamey told NMFishbowl.com then. He has since taken a job with Dreamstyle Remodeling, the company that last year signed a $10 million naming rights agreement for The Pit and University Stadium.
While McKamey headed for the exits, the Lobo Club Board was trying to ward off the oncoming blast of blame.
At the Nov. 14, 2017 executive committee meeting, Beasley made sure to note that the oversight onus for the Pit suites should have been on the university, not the Lobo Club. He explained that UNM was responsible for paying back the $46 million bond that funded The Pit remodel and added, strikingly, that the board was “unaware” the Lobo Club was the entity responsible for collecting The Pit suite revenues in the first place.
Beasley reiterated this stance, two weeks later, at the Finance Committee meeting. He told those members that had the Lobo Club board known to be looking at Pit suite accounts receivable, “we would have been asking questions about past-due amounts.”
With McKamey’s last day on Dec. 4, Jalen Dominguez, a UNM Foundation major gifts officer, took over as the Lobo Club’s interim executive director. Dominguez had won public praise earlier in the year for his role in securing the Dreamstyle deal; he would eventually throw his name in to serve in the role permanently.
Nuñez was absent at the Dec. 12 Executive Committee meeting, but Dominguez relayed to the members the new AD’s desire that the Lobo Club create a new fund with a flexible spending account, that would be for his exclusive use. Nuñez, along with the Lobo Club, would solicit donations to this fund, Dominguez explained, and “it would be at his discretion for spending out of that account.”
According to meeting minutes, the Executive Committee seemed amenable, in principal, but worried about the nuts and bolts: How would the checks and balances work? Who would be in charge of approving reimbursements? How would they be processed? Member Dee Dennis, a former Lobo baseball player, suggested that “strict rules” be put in place about what kinds of expenses would be reimbursed, although it was unclear who would oversee the process.
On Dec. 18, Beasley sent the entire Board of Directors a draft proposal of the amended Lobo Club bylaws, which explained the organization’s new charge disbursing the existing Sports Enhancement Funds. The amendments had been drafted by the UNM Foundation’s lawyer, Pat Allen. Among other things, they provided for a new “Athletic Director’s Sports Enhancement Account,” and there was language added that would allow the Lobo Club to provide “other financial or administrative services as needed to support the University’s athletic program” — an umbrella presumably large enough to cover an AD’s future Big Apple excursions.
“These changes are being done to accommodate additional responsibilities the University and the Athletic Department have asked the Lobo Club to take on in response to findings in the State’s special audit of the Athletic Department,” Beasley wrote in an accompanying email.
“The bylaws revisions will provide for the Lobo Club, as a privately funded 501(c)3 [sic] corporation, to become the administrator and the point of disbursement for fundraising and development expenses incurred by UNM Athletics and the individual sports within UNM Athletics.”
Car insurance, travel reimbursements, flexible spending accounts: while Eddie Nuñez’s asks were of disparate scales, they weren’t fundamentally unrelated. Here in this gaping Lobo power vacuum, forged by scandal and pressurized with injunctions from the state, Nuñez was attempting to build out a new kind of financial apparatus: one in which he had total authority and ample secrecy.
Such an entity might comp your east-coast travel without nettlesome questions; allow you to give coaches raises without Board of Regent approval; and reimburse you for the occasional Las Vegas feast without a blogger reporting on it six months later. What’s the athletic director’s ideal booster organization? One that wouldn’t leave you holding the bag on an ill-conceived Scottish golfing junket.
And so Nuñez went about unfurling the vision for this new black box, independent of the UNM Foundation, which would handle all the donor dollars that came in for athletics. Having hailed from the flush fields of the Southeastern Conference, Nuñez contended that this was the way of the future in intercollegiate athletics. And in case anybody wondered otherwise, Pat Allen made it explicit at the Jan. 9 Executive Committee meeting that the foundation was “happy to support” Nuñez’s plan. Since the Lobo Club had been created as a sports scholarship fundraising organization, Bart Kinney noted, the Board would have to think in an entirely different fashion. Indeed, if the plan went forward, the Board would have to think itself unconscious.
Beasley suggested that such an initiative could take over a year to put into effect; Nuñez said he hoped to assemble the plan by May. Meanwhile, the Lobo Club would endeavor to change its bylaws so it could handle the Sports Enhancement Funds.
But despite their receiving Board approval, Beasley tapped the brakes on enacting the Bylaw amendments at the Feb. 13 Executive Committee meeting. For one thing, the Lobo Club’s legal counsel now believed the existent bylaws already allowed for the Lobo Club to handle the Sports Enhancement Accounts. But, more to the point, Nuñez’s evolving “long term vision” for reorganizing the athletic department would almost assuredly require additional changes to the bylaws. Nuñez now said he hoped to post the job for Lobo Club executive director by month’s end and finalize the MOA by mid-April.
At the Lobo Club Finance Committee meeting on Feb. 26, Jalen Dominguez announced the plans to create a new fund in support of the Lobo baseball program. The difference between this new fund and the existing Sports Enhancement “Dugout Club”, was that this would be handled at the discretion of Nuñez, as opposed to head baseball coach Ray Birmingham. According to Dee Dennis, some Lobo baseball donors had come together, wanting to put together an endowment in support of baseball, beyond the sports enhancement level. After a meeting between Board members and UNM Foundation administrators, the decision was made to park the fund at the Lobo Club. The money could be used not only to cover annual expense of the baseball team, but to supplement coaching compensation, as well. Going forward, this would serve as a model for other sport-specific funds.
While the burdens on the Lobo Club continued to accrue, its staffing would shrink to its lowest level in the last decade. In April, Valerie Arbogast, the Lobo Club’s longest-tenured staffer, left her job as finance coordinator, for which she was paid around $50,000 annually. (Arbogast declined to comment for this story.) Including Dominguez, there were now only five full-time Lobo Club staffers, down from nine in 2015. Aside from Chelsea Redmond, a development officer earning $38,380 a year, all the rest were employed by the UNM Foundation. Redmond recently gave notice to leave, NMFishbowl.com has learned. (An email sent to Redmond’s UNM account received an automatic reply that she was out of the office this week.)
Despite all this, Nuñez has projected the kind of big-swinging overoptimism that is accustomed to his industry.
“I KNOW we will overcome these challenges and we WILL make UNM Great!” The AD wrote to Dominguez in a June 1 email. Nuñez offered a quote from Jack Nicklaus: “Resolve never to quit, never to give up, no matter what the situation.”
The June 13 Executive Committee meeting would be Beasley’s finale as Lobo Club president; in gratitude for his services, a $445 order had already been placed to Standard Chair of Gardner.
At the meeting, Dominguez gave an update on my public records lawsuit against the UNM Foundation. Several weeks before, Judge Franchini had ruled in favor of my motion for summary judgment, agreeing that the foundation’s documents should be subject to public record requests. In the wake of Arbogast’s departure, the Lobo Club would now rely on accounting assistance from main campus and the Albuquerque firm, Fidel, Perner & Michnovicz, for which Lobo Club Board member John Perner is a partner. The Lobo Club denied a request seeking any invoices paid to the firm for this work.
A year had passed since Krebs’s resignation, although he would soon be making some ignominious cameos in the news. While the UNM Foundation had decided to appeal Franchini’s ruling, it would soon be visited upon by warrant-wielding agents from the AG’s office, seeking evidence of Krebs’s $25,000 hush payment. The university’s decision to cut four sports programs evoked state-wide anger. And the Lobo Club had neither a revised MOA or a permanent executive director.
Needless to say, things were tumultuous on UNM’s South Campus. But Nuñez had a vision and Mike Alden had a glib script to grease the wheel.
Through an IPRA request, NMFishbowl.com obtained a series of email correspondence between Alden and various UNM officials since May. With a mix of folksy midwestern claptrap (“We received some rain this weekend in Missouri…it was good for our farmers and our lawns”), smiling emojis and tautologous buzz phrases, Alden delivered a sermon from the intercollegiate prosperity gospel: if you really want it, you can have it. Whatever it is.
At the heart of this fantasy is the exultation of the Lobo Club: once destined for the athletics scrapheap, now cast as its savior.
“The Lobo Club will need to take on a much more visible, collaborative, customer service and revenue generating role,” Alden wrote in an email to Nuñez, Janice Ruggiero and Garnett Stokes on July 24. He proposed a “national search” for the Lobo Club’s new executive director; the targeted hiring date was now November.
On Sep. 5, agents from the New Mexico Attorney General stormed the UNM Foundation, seeking records related to a mysterious $25,000 donation that had been made to cover some of the improper expenses paid by the university for the 2015 Scotland trip. A search warrant affidavit indicated that Paul Krebs was the likely source of the donation, and alleged that he had undertaken some rather Nixonian efforts to conceal this fact. For his troubles, he was now being investigated for possible criminal violations of the state’s Government Conduct Act.
The AG’s warrant also accused Larry Ryan and Pat Allen of making contradictory and misleading statements as part of its investigation into Krebs.
A week later, at the Sep. 11 meeting of the UNM Board of Regents, Henry Nemcik, the UNM Foundation CEO, was asked by Regent President Rob Doughty why the foundation did not have a position dedicated to athletic fundraising. Nemcik responded by pointing out that the UNM Foundation employs several of the Lobo Club staffers, but Doughty said that was insufficient. He wanted a “dedicated person” at the UNM Foundation to handle major gifts and fundraising for athletics, independent of the revenue that comes to the Lobo Club through men’s basketball ticket sales. Nemcik said that adding this one additional position would take his organization into the red for the year. (In 2016, Nemcik earned $451,158 in compensation, according to the foundation’s tax filing). The Albuquerque Journal characterized their exchange as a “clash.”
The idea that the UNM Foundation would hire a major gifts officer for athletics was already baked into the plans before Doughty raised the idea publicly. It alone belied the notion that a reconstituted, in-house (but still legally distinct) Lobo Club was designed to be the one-stop shop for all Lobo fundraising activities.
Last week, Nuñez was put on the defensive in a KOB 4 story, which called into question the contract “perks” given to certain athletic department higher-ups, including himself. Nuñez argued that such incentives “aren’t drastic enough to make a difference” to the Lobos’ bottom line, and claimed that he has already saved the department $700,000 through various cost-cutting measures.
So will his vision for department reorganization make Lobo athletics great, as Nuñez presaged in that rah-rah email to Jalen Dominguez back in June? What do you think?
Because here’s what I suspect: in the end, Mike Alden will get his $53,000; Eddie Nuñez will get his discretionary funds; Las Vegas dinners will be reimbursed; public record requests will be denied; “donor privacy” will be preserved; and we’ll all be back in none too long a time to sing a familiar tune about the makings of the latest Lobo boondoggle.
“Consideration should be given to rebranding the Lobo Club as the Lobo Scholarship Fund (LSF),” Alden wrote to Nuñez and Stokes back in August. “Suggest strong review of the ‘brand equity’ of the ‘Lobo Club’ and current, extended and anticipated ‘value’ to that name, LSF or some other consideration.”
Based on subsequent exchanges, it would seem this particular idea didn’t make headway, which is kind of surprising. After all, what better pièce de résistance for this whole production than that: converting a one-time athletic scholarship booster organization into this fundraising Frankenstein, and then calling it the Lobo Scholarship Fund?
But, as I hope you now realize, it doesn’t actually matter what it’s called. It never has. There is no spoon.
Just a collection of chairs.
Correction: This story originally and inaccurately stated that Larry Ryan was the Executive Director of the Lobo Club from 2008 to 2011, during which time there were a total of 19 findings made in the organization’s independent annual audits. In fact, David Sabolcik was the Lobo Club’s Executive Director during that period, while Ryan served as UNM’s Associate Athletic Director for Development. In that position, Ryan oversaw all athletics fundraising and was Sabolcik’s supervisor.
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